SMSF pensions: Planning your pension properly
Tim Miller from SuperGuardian discusses the most important considerations when planning a pension, potential traps to look out for, and what often can be overlooked.
Like all super funds, self-managed super funds (SMSFs) can provide you with pension or lump sum benefits in retirement. Retirement is a condition of super release if you have reached your preservation age. Your preservation age is between 55 and 60, depending on your date of birth. Super benefits are tax-free if you’re over the age of 60.
If you start a super pension income stream, you need to transfer funds from your accumulation account to your retirement account to fund your pension. The earnings on these funds are tax-free. You can transfer up to the transfer balance cap (up to $1.7 million) into your retirement account. You need to withdraw a minimum percentage of your retirement account balance each year, which varies, depending on your age.
Transition-to-retirement (TTR) pensions can be commenced once you have reached your preservation age while you’re still working. However, the earnings on funds that support TTR pensions are still taxed at 15%, unlike the funds that support your super pension are if you have retired.
Tim Miller from SuperGuardian discusses the most important considerations when planning a pension, potential traps to look out for, and what often can be overlooked.
SMSFs paying a pension may be able to reduce the overall tax liability of their fund. We explain how.
Stopping part or all of a pension can be a useful strategy for SMSFs in certain situations. We explain how and why.
It might seem complex to begin with, but if you follow these steps, you should be able to establish your own retirement income stream.
Even though SMSFs have been quietly dropped from the government’s proposed Retirement Income Covenant, that doesn’t mean trustees should ignore it.
John Maroney, CEO of the SMSF Association explains the amnesty on legacy retirement income products that was announced in the 2021 Federal Budget.
SMSF members will be able to exit old-style pensions for new if this Budget measure comes to pass.
As you approach retirement, you need to consider what you want to do with your super – lump sum, income stream or a bit of both.
The following checklist will help you get on top of everything that needs to be when starting an SMSF pension.
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